Gazprom expanding LNG business amid rising demand

The Gazprom Board of Directors has taken note of information regarding the prospects of the shale gas and LNG sectors around the world, as well as the opportunities and threats facing the company.

In their overview of LNG market trends, the meeting participants stressed that US LNG was not globally competitive due to its high production costs. In this respect, the majority of international experts believe that the active LNG plants in the US will not be used to their full capacity in the coming years. On top of that, only one final investment decision for a new LNG project was made in the US in the period from the second half of 2015 to the present. This is indicative of the dwindling interest in US LNG on the part of buyers, especially in the countries that can import pipeline gas. For instance, US LNG accounts for less than 1% of the total amount of gas consumed by European countries in the course of this year.

It was pointed out at the meeting that the largest growth in LNG consumption over the next 20 years was expected in Asia-Pacific. Europe will also experience an upturn in gas imports, chiefly due to a decline in indigenous production (which is also expected to spur the demand for Russian pipeline gas in the European market).

With LNG demand on the rise, Gazprom is making further efforts in this line of business. Documentation is being compiled for the third train of the LNG plant on Sakhalin Island (Sakhalin II project). The company also signed the Heads of Agreement to set up a joint venture for the purposes of implementing the Baltic LNG project with Shell, Gazprom’s strategic partner. An LNG production, storage and shipment complex is being built in the neighborhood of the Portovaya compressor station.